Angel Beats! takes place at a high school acting as a Purgatory, where students learn to give up any lingering attachments they still have from life before continuing to an afterlife or reincarnation. While the injury or cause of death are gone, those in the afterlife school can still feel pain or other things as they did when they were alive, as well as dying again, only to awaken with no injures several minutes later. The story follows the main protagonist Otonashi, a boy who lost his memories of his life after dying. Upon awakening in the afterlife, he meets a girl named Yuri who invites him to join the Shinda Sekai Sensen (SSS) (lit. Afterlife War Front), an organization she founded and leads which fights against God for the cruel fates the SSS members experienced in life. Their only enemy in the world is the school's student council president Angel, a being with supernatural powers who is in charge of keeping the status quo and fights against the SSS. Yuri believes that anyone who follows Angel's orders and behaves like a normal student at the school will eventually disappear and pass on to Heaven. However, those who fulfill their dreams in the afterlife will pass on as well.

In the SSS, there are two sub-divisions which help in the SSS's operations against Angel. The first is a four-girl band named Girls Dead Monster whose objective in the SSS is to cause a diversion from other activities the SSS is engaged in, while on the surface appearing to be a normal all female band. This includes distracting Angel and a large number of "normal" students and teachers at the school Yuri deems "non-player characters" as they are not human, but look and act the part. Another organization in the SSS is the Guild, located far below the surface of the afterlife world, which serves to supply the weapons the SSS uses against Angel. Anyone in the afterlife is able to create anything out of dirt that they had memories of in life, and the Guild uses this ability to mass produce weapons. Angel uses a similar ability to create her supernatural powers, with the aid of a computer program called Angel Player.